I brought the details to American for confirmation, and they did not deny the changes. Instead, spokesperson Barbara DeLollis relayed that they “don’t comment on rumors.”

Nonetheless, and while I’m sure there will be a fuller picture shared by American going forward, here are the details as I understand them:

Elite status earning remains very similar to what it is today with no minimum spending requirement for status. They’re eliminating the third qualifying method, ‘points’, while making elite qualifying miles easier to earn (a system similar to United’s). Executive Platinums will start with only 4 confirmed upgrade certificates per year rather than 8, but can earn more.

American will be going to a revenue-based mileage-earning system a year from now copying Delta and United. Golds and Executive Platinums will get a bigger bonus for flying, while Platinums will see a reduced bonus (not surprising, since the 100% bonus for Platinums was too generous).

We don’t know anything yet about changes to the award chart or restricting benefits on basic economy fares.

From what I understand they view the program as an improvement for high spend customers, while lower spend customers won’t do worse with AAdvantage than they will with the already-gutted Delta, United, or Southwest programs (though in the case of United, award availability on Star Alliance partners is far better).

Elite Qualifying in 2016 for 2017 Status

There are no changes to American’s status levels (there will still be 3 levels: Gold, Platinum, Executive Platinum). Those levels will still require 25,000, 50,000, and 100,000 miles. Qualifying on segments instead of miles will not change.

American is eliminating their third method of qualifying for status: elite qualifying ‘points’. They had an either-or system of miles flown or miles adjusted by type of fare. Those are being combined, with expensive fares earning more qualifying miles than before.

I would regularly buy some expensive fares, some cheap fares, and the expensive fares didn’t help me earn status faster as a result. That changes going forward.

Full fare first and business class (F, J) will earn 3 qualifying miles per mile flown

Discount first and business class will earn 2 qualifying miles per mile flown

Full fare coach (Y, B) will earn 1.5 qualifying miles per mile flown

Discount economy will still earn 1 qualifying mile per mile flown

Partner-earning charts haven’t been released yet, but will be adjusted along these general lines.

Elite benefits from one year will expire January 31 of the following year, instead of February 28.

Executive Platinums will no longer automatically earn 8 confirmed systemwide upgrades a year. They’ll earn four — with the opportunity to earn more.

Gold and Platinum members will earn 500 mile upgrade certificates for every 12,500 qualifying miles earned, rather than 10,000 (but of course qualifying miles become easier to get especially on higher fares). Beginning in 2018 the counter will reset to zero on February 1 instead of March 1, to align with changing the end of the elite benefits year.

Late 2016 Redeemable Mileage Earning Goes Revenue-Based

American will adopt a system very similar to Delta’s and United’s for earning redeemable miles based on the cost of a ticket in “late 2016.”

Since American has three elite tiers rather than four, you get somewhat different winners and losers. Golds get a bigger mileage bonus than they do today. So do Executive Platinums.

Platinum members — earning 50,000 to 99,999 qualifying miles per year (with no elite level in between) — see their mileage bonus reduced.

Revenue-Based Redemptions are a Mistake, But it’s a Mistake the Other US Airlines are Making Too

As the largest airline in the world, with a global network that spans 54 countries, our frequent flyer program must also be the best in the business. A mile flown continues to be a mile earned in AAdvantage, and now we’re going to reward customers even more when they purchase a First or Business Class ticket.

Just a year ago declared that in a ‘best in the business’ frequent flyer program, a mile flown must earn a mile. So American AAdvantage appears to be shifting strategy, no longer seeking to be the ‘best in the business’.

There’s nothing sacrosanct about a ‘mile’ but it is a proxy for how much of one’s life a customer spends with an airline. It’s a mistake to reward directly based on spending because it reduces loyalty to a transaction, and because it misunderstands where a customer’s value actually comes from. “Rewarding high spend” isn’t the same as “incentivizing more spend at the margin.”

A flyer may buy one expensive ticket with you because you are the only airline who flies non-stop on the route. Does it make sense to reward them? Rewarding that customer gets you nothing incremental in return if they’re going to pick your airline anyway. (The same applies for business travelers who are part of many managed travel programs, who may not even be choosing the airline they fly.)

In general a high revenue passenger is probably better for an airline than a low fare one. But a high fare passenger may trade off with another high fare passenger (for instance buying the last last seat available on a flight that would have been purchased by someone else). That high fare customer wouldn’t actually be profitable in an economic sense (opportunity cost basis).

On the other hand a low fare passenger may fill empty seats and be pure profit. American’s President Scott Kirby made the point during their 3rd quarter earnings call that when they offer rock bottom fares they aren’t losing money on passengers because it is very inexpensive to carry an incremental passenger filling an empty seat. (Of course if revenue management gets things wrong then the cheap passenger could displace a high fare passenger.)

Low fare customers may also engage with an airline’s ancillary products. Base airfare isn’t the only contribution to revenue that matters, and other products are often higher margin than the actual airline seat.

Third party partner customers are profitable too. A member who carries an airline’s credit card and uses it, credits points for their non-air travel to the program, and uses their shopping portal may be a more profitable customer than a high fare one.

The program needs to try to influence incremental business. It may reward a high spend customer but not get additional business from that customer than they’d have already gotten. Meanwhile it might be possible to move the needle with other customer segments.

People are already buying 2016 travel, and at least in the case of systemwide upgrades for top elites American is changing the benefits that will be earned from that travel. I really do think they should have announced that change earlier.

Changing the elite bonus for Platinum members from 100% to 60% in ‘late 2016’ concerns me as well. They really should wait until the 2017 elite year to do that.

The biggest changes affecting the most members – elimination of points qualifying (offset by what many will see as an improvement for high revenue flyers) and moving to revenue-based accrual (coming with a year’s notice) – don’t raise this same concern.

Several Unanswered Questions

Of course we don’t really know how to evaluate these changes with only half the story. It’s about earn and burn and we know how status and miles will be earned and not about changes to redemption. How much those revenue-based miles will be worth in the future is an open question.

Ultimately these changes are probably as good as it was going to get – both in terms of notice (we do get a year warning they’re going to revenue-based earn) and changes (they really aren’t changing the elite program much). At least until any next shoe drops either in terms of award chart changes or restricted program benefits or mileage-earning on ‘basic economy’-type fares.

And while I think I know some of the answers, I don’t yet have confirmation on several important questions such as:

What changes will be coming to the award chart?

How do Executive Platinums (and Concierge Keys) earn more systemwide upgrades? What are the thresholds? Will those systemwides change at all (their terms and conditions, eg valid on all published fares)?

Does American believe it will be awarding fewer miles for flying once it makes the shift to revenue-based earning in late 2016, since break-even earn with current system is at an average fare higher than American’s current passenger revenue per available seat mile divided by its load factor?

Will current premium fare redeemable mileage bonuses continue in 2016 (at least until switch to revenue-based)?

Is there any change to Citi/Barclays qualifying miles earning from their premium co-brand cards?

More From View from the Wing

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

Comments

Does the same treatment apply with OneWorld partner airlines? EG if you fly with Qatar on a discounted business fare do you get 2 x the miles credited as EQMs for reaching elite status – if that is the case the revised arrangements doing away with points is not too shabby.

1. I’m also interested in William Jones’ good question about earning multiple elite qualifying miles for business class on partners like Qatar or British Air.
2. Also, correct me if I’m wrong, but for the coming year (before going revenue based) it sounds like the new system works well for someone flying a mix of economy and premium cabins, in that they get extra EQMs for premium and 1:1 for discount economy. (As opposed to the previous system where it was either/or for seeking status through EQMs of elite qualifying points.)
3. But the advantages of this new, purely EQM system (plus of course segment-qualifying) go out the door when American switches to revenue-based at the end of next year.

Gary: Shouldn’t your fourth subheading be “Revenue Based Earning” rather than “Revenue Based Redemption,” or am I missing something? You do make it clear, I think, that the redemption chart changes, if any, at this point are completely unknown.

With EXP’s getting unlimited upgrades, the 500-mile-upgrade system benefits Golds at the sole expense of Platinums. I was always under the impression that the 100% Platinum bonus was compensation for this.

If the rumored changes go into effect, what incentive does a flyer have to qualify for Platinum? It seems that somebody who flies 25k miles would get very similar benefits as somebody who flies 99k miles. The biggest selling-point would become OneWorld Sapphire status.

So AA is following the lead of Delta like United after all. Now Gary isn’t exactly giving them a pass here which I can respect, but I wonder if all the other AA fans (aka most travel blog writers) will display the same fervor in their vitriol and acrimony that they dished out when Delta gutted their program and again when United followed suit. I wonder how they will still defend AA with its less than Delta’s excellent operation and tired jets (though 100 new planes this year should help) with a comparable FF program?

I have points in all three programs. Personally, I consistently find it more difficult on the whole to use my AA and UA points than my Skymiles/pesos. I know everyone’s experience is different (I’m a Delta elite in a former hub city, use points for 90% of my flying not just aspirational international first class). I just think it will be interesting to see the reaction from the vocal minority, especially on the part about reducing the 8 SWUs to 4 for EXPs.

Does American going revenue based change how you will buy tickets in 2017? For instance are you less likely to buy a $300 ticket on American than a $250 ticket on Southwest? For this exercise say that you see all Biz booked and will have no chance of an upgrade. If they move to revenue based redemption too what is the best option going forward for earning for redemption. I know I won’t be getting any Citi cards until they have released redemption rates.

Is there anything going forward that will make programs go back to miles=points?

Well, that is very disappointing. I always hit Platinum (but will only hit Gold next year) and have hit Exec. Platinum a few times. So less miles earned + crappier food and amenities = more loyal customers? I don’t think so. Most companies ratchet up benefits over time to keep the loyal customers more loyal. AA is reducing benefits and basically saying “Go ahead, leave, I dare you.”.

The one thing I say is now Delta wont just be the punching bag for everyone. As expected major changes at American and in my opinion this is only the start. Why was 100% bonus miles for Plats too generous? Up until the last wave of changes at Delta to a rev model, Diamonds got 125% bonus. American has been making plenty of changes to low level award availability. That has been happening for the last 24 months with more frequency, from what I have seen. The high level rates shown are pretty incredible points wise. Of course some routes never show a single low level seat ever. I expect more changes in the next 18 months at American. This is merely the start. I knew all along they would be rev based. As always book those tickets now prior to reward chart changes and adjustments.

As somebody who years ago made it to lifetime Plat. I look at the plat benefits which are pretty minimal overall anyway. Even though the lifetime program remains, it is the terms that matter and the award charts not the status itself. Now clearly the only status worth anything is EXP. At least with Delta, and I dont want to defend them in any way Plats get operational upgrades along with the other benefits. With American the upgrades are with stickers only. I know many will be unhappy with 4 Upgrade certs from 8.

At least with respect to RDM, when I cross 1,000,000 miles this month and get GLD for life, there is absolutely no reason for me to even bother trying to achieve PLT status for 1 more point per dollar. 95% of my flying this year was in F/J on AA (or T on EC). No point in bothering to try and fly more to get that 100% bonus. I can’t be alone. I think, ultimately, AA will find that the loyalty program was why people were flying them in the first place. Agree with Gary that this “innovation” is ultimately going to fail.

I am exPlat so it looks fine prior to any devaluation on redemption. I don’t like the 4 instead of 8 but was more unhappy that even getting to 150k didn’t get me more than 8 despite calling and trying the let’s make a deal approach I had read about on this blog. So if it is 4 more per 25k points that would be better for me since I’ll earn more if the above is true.

But it is the combination of earn-burn on points that keeps me on AA tin versus the superior Delta flight experience-poor mileage program

Domestic first is nothing but an insultingly poor “perk” for frequent fliers, and someone spending beaucoup bucks on an international ticket at the front of the plane won’t fly the US3 anyway if he has half a brain.

Gary I know it is too early to say, but if we look at United/Delta programs, how do you think it will work on partners. For example if I book at ticket on BA stock, but fly on an AA aircraft, how do you earn the miles. Would the redeemable miles be earned based on the distance flown?

Finally, am I off in thinking that in the future AA Ex Plat level will be much more similar to the current AA Platinum level. For example if you purchase a $700 fare LAX-DFW in the future, as a AA Ex Plat, you might earn only the same amount of miles a current AA plat does today. And for upgrades on international you get a maximum of 2 of your trips upgradeable. The rest you would be sitting in the back with the platinums, golds and kettles.

To me the biggest reason to be elite with any airline is the upgrades. AA is announcing a 50% reduction. That hurts me quite a bit.

Gary has been touting AA since the day DL and UA announced revenue based programs and pleading almost daily to AA executives to stay the course. All in vain of course as Doug Parker and his minions could care less what a few bloggers think.

Well, enjoy it while it lasts because AS I PREDICTED AA will be following DL’s lead away from mileage-based earnings – just delayed a year due to the merger. And once this happens all those who defected to AA will reassess, particularly if they can’t find award inventory. Also AA product will start to deteriorate under Doug Parker’s leadership – guaranteed.

Again I predict: the result will be a move to a newly-refurbished UA which is taking steps to win back flyers under its new leadership. UA may have surly FAs and an inferior hard product, but MP still provides the largest network for business flyers who want miles that are easy to earn and spend.

Hmmm…Gary Leff didn’t break the story on the changes. American didn’t adhere to Gary Leff’s advance notice requirement. American is going revenue based against Gary Leff’s wishes. Yet Mr Leff is saying these changes aren’t so bad like the good AA Fanboy he is.

This is such a “The Emperor Has no Clothes” moment! If this was Delta or United his vitriol would have no bounds.

This just reinforces my decision to just burn my miles / points and forget about earning status. Thankfully I own a business and earn quite a few miles putting all of my expenses on AMEX and Chase Ink cards. I will be canceling my Citi AA Executive card as I get lounge access flying F LAX – JFK domestic anyways. So sad the only stand out in the US frequent flyer program has been drastically reduced. I knew this was coming with the take over by USeless airways. The US airways people would not believe that Doug would ruin the airline well here you go. Enjoy your reduced benefits.

I don’t have Elite status, nor will I ever achieve it. What I want to know is “when” the Award chart will be devalued so I can book tickets asap. I only fly economy, but there’re 3 of us in our family, so I can really stretch our miles for international travel. If the chart is going to be devalued, as a customer of AA I prefer to have months of advance notice. It would suck ROYALLY if the award chart devaluation were to come into effect on Jan 1, 2016. For me, THAT’s the missing key info I want to know.

1) The service is now generally worse vs. pre-merger AA.
2) Award seats are not released the same way as AA did just two years ago.
3) 25% (?) of the planes are USAir metal – painting those outside doesn’t make them prettier inside (with no power under the seat and no entertainment).
4) I am EXP – a 50% reduction in SWU is the major cut in benefits.
5) Revenue-based model for redeemable miles is another huge cut even for EXP.

@Laura as with any of these things- BOOK as soon as you can for travel in 2016. Guessing when the chart changes is not productive because it can change at any notice. Delta took heat over mileage charts for flights. but what really matters is when you try to book a ticket on AA for example. If the award chart says low level is 62.5 for first but they only show top level at 125 each way or 180 each way what does that really mean?

Well, the end is near. Each airline used these programs to generate enthusiasm for travel and loyalty— now each is consciously discarding the programs slowly and surely, considering us over-entitled now that they’ve cut capacity.

So why should I have any loyalty? I won’t pay a nickel more than I have to and I’ll be money ahead. I’ll burn miles as I can. I’ll select flights by schedule, not by earning power. I’ll do less flying— I’ve kept up my miles for years because of these programs, but now they’ve clearly said they don’t care— I can probably cut it in half, and save mega bucks.

i suspect I’m not alone on all this, and I expect Doug Parker, DL and UA haven’t an inkling how canceling the Frequent-Flyer-Program-Effect will cut demand permanently. Oh well; these companies have never made good management decisions. Bean counters.

Imagine the free time AA is giving me! I’m just sorry I have 30,000 miles already booked in 2016— jumped the gun on some good fares, thinking I’d be ensuring my ExPlat status for 2017; now I’m not so sure this will be the plan.

I’ll wait for the official policy announcements but have no doubt that the changes outlined by JonNYC at TB and and Gary here are basically reliable.

If so, it makes all the sense to become a free agent. Use credit cards etc to obtain perks. Fly whichever airlines offers the best fare or schedule (UA, DL, AA, WN, VX, B6). Same internationally, except that the airlines are expected to vary greatly by the route. For me, I’d probably use the ME3 and a few European carriers much more.

Ironically, that’s how everyone was when I started flying more than 30 yrs ago, before Internet, when we used to call a dozen TAs, get lots of quotes and choose whatever made sense. In the meantime we saw this great bubble of loyalty programs and related games. Was almost dreamlike fun while it lasted, got to admit that. 🙂 However, time to wake up and back to reality.

For an expat like me who do have a non-US residence the change to revenue based earnings negates the elite qualifying advantage when compared to Delta or United. Both of them have self operated flights to all 3 major continents. I find it a bit more difficult to get flights operated by AA to Asia. No problems with codeshare flights but they are pricier compared to the other 2 airlines. Since minimum spend is not a requirement for me and the earning rates are about the same, I might as well fly United/Delta. I hit 76K a year on the average and on these 2, I get to eek out an extra mile per $ as a 75K’er.

The travel industry is doing well now, they can cut all they want and even if people leave, they’ll still be making record profits. When a slump happens, they’ll be wondering how they can bring customers back. Very standard public company SOP in the US. It’s all about the short term profits to appease Wall Street and get management their bonuses. If it wasn’t for the protectionist policy of denying non US based airlines to fly domestic routes, all 3 dinosaurs would be dead.

Something interesting to consider, according to a WSJ article from July of 2012, “American Airlines says 25% of its fliers account for 70% of its revenue.” The remaining 30% of their revenue comes from those of us who aren’t road warriors. Considering that AA is operationally pretty mediocre, I’m not sure how they think they will attract those fliers who account for the remaining 30% of revenue. I also think that their profit margins aren’t robust enough to be maintained if a significant amount of those 30% start flying other carriers more frequently.

Delta flies on time and doesn’t cancel flights with great regularity, unlike AA. AA flights are often slightly more expensive, and for that extra cash, you don’t get better service, better planes, better ground experience, friendlier staff, or a better overall experience. What set them ahead of their competition was their generous FF program. Now that they are devaluing that, they just look like another shitty airline with some shiny new paint on their livery.

The vast majority of my flights are on OW premium cabin transpac. I’m an ExPlat. Do I hold off crediting to AA until the new warning system kicks in in late 2016? AA will be losing much of business then.

Gary correct me if I´am wrong, but to qualify for Platinum you will still qualify by flying 50,000 miles REGARDLESS of revenue and revenue only affects REDEEMABLE mileage right?
If so, then as far as my understanding go it is still better than other programs where the revenue affect the status qualifying miles right?
I have been PLAT for 10 years with the odd year where I reached EXP,
do you think the 60% bonus on regular mileage will be in late 2016 for flights starting in 2017?
I welkcome replies from anybody
tks

@doug you will fly 50,000 miles or less for platinum status with no revenue component. delta and united have minimum spend requirements for status (which you can avoid by spending money on their credit cards, though united won’t let you avoid the spending requirement for 1K)

Tks gary
I think you mean 50000 miles OR MORE (up to 99999)
As a regular platinum, the only loss I see is about 30000 miles a year (40% of my usual 80000 miles I fly) so not happy but could have been much worse
Do you think they will apply the bonus reduction during 2016 or for flights starting 2017?
Tks

Tks gary
I think you mean 50000 miles OR MORE ( up to 99999)
As a regular latinum flying about 80000 miles a year on deep diacounted economy tickets, it could have been much worse
Will loose about 30k of redeemable miles, but still i think prigram remains better than others
At least until we see what the changes are in redemption charts

I’m a 40 year monthly flying customer who will leave American the day they stop giving me actual mileage on each flight. I can use JetBlue’s better product on nonstops without needing to connect to enjoy the relinquished Aadvantage.

The only way I’d continue with devalued American is if I could do it from Alaska mileage plan, flying AK, DA and AA metal with mileage credited to Alaska Do you think that Alaska will be forced to cut mileage earned on these carriers too? They have no close in booking fee and their Hawaii flights are good rewards.

Really is a shame AA decided to go this route. As a casual miles/points guy I’ve been focusing my loyalties on UA but had recently contemplated making the switch towards AA. At this point I think it’s fair to say that it’s only a matter of time before UA and MP surpass AA adv. It actually seems like UA is trying to rebuild their image and product offerings going forward, while AA seems to be going in the opposite direction.

Probably inevitable move by Doug Parker but as a former UAL 1K turned Execplat I’m not happy. I already find availability for redeeming on AA a major problem, switching to a revenue based model? I’ll leave AA the moment that happens. The integrate before we innovate was good and AA took care of me, in the near future its looking like free agent status for me or Alaskan.

There is one segment that will be amply rewarded with RDM though: expensive short-haul flyers. I’m currently EXP, travel most every week, but usually only fly within the Midwest. For a typical flight, I might spend $600 on a flight from ORD to CMH, MCI, DTW, MSP etc. Flight miles are less than 500 so with minimums I generally earn 1,000 miles per flight regardless of fare. Let’s say I finish with 80 segments this year (down from last year): I will have earned only 80,000 redeemable miles, which might only be good for perhaps 1-2 RT Y tickets at the inflated mileage requirements. I will have spent roughly $20-$25k with American. That same spend, had I been flying to LAX, SFO etc. would have generated roughly 275,000 redeemable miles. Now, my flight last week from ORD-CMH at a base fare of $442.80, instead of earning 1,000 miles, would have earned 4,871 miles. Which flyer is more profitable? Me spending $442.80 for a 50 minute flight to CMH or the guy spending $442.80 for a 4 hour flight to the west coast? I suppose the answer is me, though I still probably pale in comparison to the person in paid F/J on transcons and int’l, which is why it’s still difficult to make EXP as a short-haul weekly flyer.

My only wish is that they would better enable someone like me to earn EXP. I understand the 1.5x-3x multipliers, but the majority of my planes don’t have first class, and 1.5x of 275 miles twice a week is still a long, long way from 100,000 EQM a year. With the bump up to 120 segments, I can fly literally every single week of the year and still fall short.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.

Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

View from the Wing is a project of Miles and Points Consulting, LLC. This site is for entertainment purpose only. The owner of this site is not an investment advisor, financial planner, nor legal or tax professional and articles here are of an opinion and general nature and should not be relied upon for individual circumstances.

Advertiser Disclosure: Many (but not all) of the credit card offers on the site are from banks from which we receive compensation if you are approved. Compensation does not impact the placement of cards in content. Banner advertising, in contrast, is paid for by advertisers (we do not directly control the banner advertising on this blog).

I don't include all US credit card offers available on this site. Instead, I write primarily about cards which earn airline miles, hotel points, and some cash back (or have points that can be converted into the same).

Editorial Note: The opinions, analyses, and evaluations here are mine and not provided by any bank including (but not limited to) American Express, Chase, Citibank, US Bank, Barclays or any other company. They have not reviewed, approved or endorsed what I have to say.

Comments made in response to posts are not provided or commissioned nor have they been reviewed, approved, or otherwise endorsed by any bank. It is not the responsibility of any advertiser to ensure that questions are answered.